The global market of organic products grows by 10-15% annually, while its commodities turnover in 2016 is estimated at around €80 billion. Local European producers are unable to satisfy the tremendous demand for organic products in developed countries. Due to this, the import from developing countries started to increase recently. At the same time, this process is constrained by discrepancies in the certification of organic products as well as relevant regulatory legislation in different countries. After 5 years of heated debates, the European Commission and European Parliament adopted new organic regulatory rules. It will come into force on 1 January 2021.
Main changes in EU organic legislation
Unified standards and rules will be set for all participants of the EU organic market – including countries outside the EU which export its products to the members of the Union. A strict set of rules which is based on the European legislation will change 64 standards which currently substantially complicate the international trade of organic products.
The existing equivalency principle will be replaced by the conformity principle which is currently applied in the United States. It means that organic products imported to the EU will have to match its standards. Equivalent standards will be recognized only within the framework of bilateral trade and other agreements, between EU, USA, and Canada for example.
Unified standards will mean that the EU organic logo guarantees to consumers all over Europe equal quality of products. It’s an important question, as consumers of organic products pay more because they expect to receive high-quality products regardless of its origin.
The list of organic products will be expanded and among all will include salt, essential oils, and natural corkwood. The organic market of seeding material will be created in order to increase the biodiversity, as well as the resistance of plants to disease and pests.
The business conditions for small farmers will be simplified: they will be able to undergo certification in groups and thus save a lot of time and money. Furthermore, the simultaneous engaging in organic and traditional farming will be allowed if both business directions will be separated in accordance with the standards. It will substantially facilitate an expensive shift to organic production.
Global organic legislation: current situation
According to the data of the Research Institute of Organic Agriculture (FiBL), in 2017 standards for organic products were applied in 87 countries and 18 others were in the process of the relevant legislation development. In some countries, national standards regulating certification are adopted.
Largest countries-importers of organic products are the USA, European Union, Canada, and Japan. Export of organic products to these countries is possible if:
- there is a bilateral agreement between the exporting and importing country;
- direct recognition of the certified body by the relevant importing country is in place;
Bilateral agreements between exporters and target country of import
Such agreement may confirm that the regulatory system and standards correspond to the internal demands of the importer. As a rule, such agreements are the result of intergovernmental negotiations, even though they are based on technical assessments.
The United States of Amreica and the European Union biletarary recognized standards and regulatory systems of each other except for some provisions. Besides this, the EU adopted certification standards of 12 countries as equivalent to their own (so-called «the list of third countries»). Ukraine isn’t on the list.
The United States has bilateral agreements with Canada, Japan, South Korea, Switzerland and are currently assessing the Mexican system of organic control.
Recognition of the certification authority by the importing country
The USA, EU, and Japan recognize certification authorities outside their countries, but in order to meet relevant standards, it’s necessary to fulfill a number of complicated technical requirements and pay expensive fees.
Only products certified by an inspection body or recognized by the European Commission can be exported to the EU: the updated EU Regulation 1235/2008 provides the list of approved agencies of «third countries».
In the USA the certification is conducted in accordance with strict norms:
- control is conducted by inspectors trained in accordance with NOP standards;
- the survey developed by NOP is used in course of the procedure;
- only certificates issued by the bodies accredited by the United States Department for Agriculture (USDA) are accepted.
Currently, around 80 agencies all over the world are eligible to certify farms and enterprises in accordance with the USDA standards.
The comparison of norms and standards of key markets of processed organic products
The growth of the organic sector results in increased production of processed organic products which in its turn leads to the need for the establishing more strict control over its quality and safety. In this report, UFOAM, as well as standards applied in the EU, USA, Japan, China, and 3 European private standards, are compared. Around 90% of the global market of organic products (in money equivalent) is certified in accordance with these 8 standards. The USA has a 47% share, while the EU – 37% share.
In general, organic standards regulate products processing in accordance with the following two concepts:
- by authorizing or prohibiting particular processing methods;
- by authorizing the use of particular ingredients and materials during the processing.
Rules related to technologies and methods
Main provisions applicable for all 8 standards:
- The ban on usage of GMO materials, including food additives and other ingredients, except for veterinary products imported to the EU;
- A complete ban on ionizing emission, synthetic solvents, and abrasion filters.
The only point where the major discrepancies are observed is related to methods of products processing. For example, in accordance with IFOAM norms, EU standards and Soil Association (Great Britain) the processing can be divided into mechanical, physical and biological. At the same time, NOP identifies 21 types of processing methods, while Chinese standard contains only 10. The list contains such technologies as dehydration, conservation, fragmentation, filtration, freezing, etc.
As for the private standards, they are more precise in terms of requirements with a comprehensive and detailed description of authorized and banned technologies. For example, Bio Suisse (Switzerland) allows to use 7 methods of cow milk processing and bans another 4.
Rules applicable to food and technological additives
In all standards, it’s indicated that its number should be minimal. Synthetic colorants and flavoring materials are as a rule also included. Governmental regulators sometimes authorize the application of chemically synthesized colorants equal to natural, while private standards don’t.
All standards contain the list of authorized materials which can be used during the organic products processing. In the majority of cases, they are divided into two main categories: food and technological additives. If a certain material isn’t on the list its usage in organic processing is forbidden. Standards also regulate the use of water, salt, microorganisms, ferments, etc.
Food additives – materials which are added to the product for the improvement of its flavor and appearance, as well as to prolong its expiration date. These materials should be indicated in the list of ingredients.
Technological additives are used during concrete processes of preparation, processing or storage and shouldn’t be indicated in the list of ingredients even if they can be found in the final product.
71 additives are on the EU standards’ list, and 89 are in the USA list. For the comparison, the international system of food additives for non-organic products contains around 430 different materials.
What about Ukraine?
On the 10th July 2018 the Law № 5448-д «On main principles and requirements for organic products production, turnover, and labeling» was adopted. Let’s consider its key provisions which will enter into force within six months:
- Procedures of organic production certification, as well as requirements for certification bodies, are established. Spheres of organic production are specified: livestock, agriculture, aquaculture, etc.
- Requirements for organic products production, labeling and retail are defined. Products can be marked as organic only in case they contain at least 95% of organic ingredients. Other 5% can be represented by materials which are on the list of allowed ones. The processing process should also meet the established requirements.
- Precise and transparent mechanisms of state control over market participants are established, the scope of responsibility for the organic legislation violation is identified. For example, if a company marks its products as «organic» without any relevant certificate, it will pay a fine equal to 5-8 minimal salaries.
- Support of national producers of organic products on state and regional level should be financed through governmental programs directed at the development of the agriculture.
These changes allow to bring the Ukrainian system of organic products quality control in line with the EU requirements. This, in its turn, will lift the technical barriers for the export of Ukrainian products to the European and other markets. Thus, in the nearest future, we expect a substantial increase in the number of national producers of organic products. As of June 2017, 420 such producers were registered in Ukraine.
You can learn more about the organic market in Ukraine by downloading the new infographics guide “Agribusiness in Ukraine”.